ArvinMeritor hikes Dana bid; shares drop

LuisaBeltran

NEW YORK (CBS.MW) -- ArvinMeritor raised its hostile offer for rival Dana Corp. by 20 percent Monday, in its long-running bid to acquire the auto-parts maker.

ArvinMeritor
ARM, -4.76%
bumped its price up to $18-a-share from the original $15 bid. In a letter to Dana Chairman Glen Hiner, ArvinMeritor CEO Larry Yost said the $2.7 billion offer was final and would expire on Dec. 2 at 5 p.m. Eastern time.

"We urge you to carefully weigh the implications of refusing once again to sit down and discuss a transaction that would immediately benefit Dana's shareowners," Yost said in the letter Monday.

Dana
DCN, +2.11%
in a separate statement, said its directors would evaluate the revised offer. "Dana urges its shareholders to defer making a determination of whether to accept or reject ArvinMeritor's revised offer until they have been advised of the Dana board's position," the company said.

Dana's shares plunged $1.41, or 8.5 percent, to close at $15.24 Monday, while ArvinMeritor fell by 12 cents to $17.94.

In July, ArvinMeritor originally launched a hostile cash offer of $2.2 billion, or $15 a share, for Dana, which makes components for trucks and cars including axles and brakes.

Since then, Troy, Mich.-based ArvinMeritor has extended its offer several times and has said it would raise the bid if Dana would work with the suitor to complete a transaction.

But Toledo, Ohio-based Dana has rejected the proposal, claiming that ArvinMeritor lacks the proper financing and that the bid was too low. The deal would also raise antitrust issues, Dana has claimed.

The likelihood of ArvinMeritor's success remains questionable. Last week, the company reported that its fiscal fourth-quarter profit fell to $33 million, or 48 cents a share, from $41 million, or 61 cents, for the final three months of fiscal 2002. The two companies have also sued each other.

But Dana has remained firm in its refusal, even after Chairman Joe Magliochetti passed away in September.

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